Educational Finance in Thailand - UNESCO Bangkok

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Final Report, Volume II/3 Anthony. Cresswell: Educational Finance UNESCO-PROAP TA 2996-THA Education Management and Finance Study July 1999 be registered by the OPEC. This would be the primary government quality control mechanism. Registration would be for five year, renewable periods, and can be revoked at any time for cause, the details of which would be spelled out in legislation and regulations. The size of the subsidy would be set at 35 per cent of the per-student subsidy amount for the government schools, with an amount equal to an additional 35 per cent of the per-student government subsidy as a fund for scholarships to students from low-income families. Under such a scheme, registered schools would receive some government support. Those schools enrolling higher proportions of poor students would receive higher support, improving the educational opportunities for those children. The private schools would continue to depend on private resources to finance the full program, thus maintaining incentives for mobilizing these resources for education. e. At the implementation of such a policy, all existing OPEC and non-proprietary schools would receive an initial registration without review, in order to maintain operations. All private owner schools would receive a provisional one-year registration, which must be reviewed and transferred to a regular five-year registration within the first year. Any private owner schools which cold not meet the registration conditions would be removed from government subsidy at the end of the first year. 3.3. Higher education financing 3.3.1 Level of subsidy a. The overall subsidy of higher education should be reduced. The current subsidy ratio of over 90 per cent of the direct costs of higher education cannot be defended on either efficiency or equity grounds. The main issues for reform are the appropriate level of subsidy to use as a policy goal, and a mechanism for ensuring equitable access to higher education for poor students in a system with higher fees and expenses for individual students and families. The typical system for the financing of higher education consists of subsidies to institutions, loans and subsidies to students, and substantial private expenditure on direct and indirect costs of education. Reasonably current estimates of the ratios of subsidies to private costs of higher education for neighboring countries are not available for comparative purposes. However estimates from OECD countries are available, for both centralized and decentralized systems. For the mostly decentralized OECD countries 21 , the public expenditure on higher education is approximately twothirds of the total. For the same countries, as well as the mostly centralized countries 22 , the ratio of expenditure on higher education relative to lower education is less approximately 2:1. This latter proportion reflects much higher participation rates of upper secondary education in the OECD countries than in Thailand. So a somewhat higher ratio may be a more reasonable short-range goal. Overall, however, these levels of support and subsidy seem like reasonable longer-term policy goals for Thailand. 21 These countries are Australia, Canada, Germany, Japan, Switzerland, U.K. and U.S. (OECD Indicators, 1997). 22 These countries are Austria, Belgium, France, Ireland, Italy, Luxembourg, Netherlands, and Portugal. (OECD Indicators, 1997) 104
Final Report, Volume II/3 Anthony. Cresswell: Educational Finance UNESCO-PROAP TA 2996-THA Education Management and Finance Study July 1999 b. Achieving such policy goals would mean very substantial shifts in the overall funding of higher education, with large increases of direct and indirect costs being borne by students and families. However, it is very difficult to estimate the actual amount of increase in fees and costs that would result. This is because there is likely to be considerable opportunity for increased efficiencies in the operations of higher education institutions. But it is quite likely that the costs to students and families for higher education could increase by a factor of five or more. Such higher fees would effectively bar poor students from higher education and place a much greater burden on middle income families. Therefore a substantial expansion of income-based financial aid should be made available to students. This is could be based on an expansion and further development of the student loan scheme discussed in a separate report (cite here when available). Scholarships for able poor students should also be developed. c. In addition, it would be necessary to phase in the shift of costs under this recommendation. The most direct way would be for the Government of Thailand to simply reduce the per-student subsidy by a fixed amount over a 5-10 year period. The soon-to-be-autonomous institutions could then design their own responses to the shifting financial burdens. They could reduce the necessity for precipitous increases in fees by instituting efficiency measures, raising private funds, as is common in most countries, and providing financial aid to students from local revenues. d. The issue of an appropriate subsidy level for higher education was discussed at length during a Policy Workshop on Educational Finance Reform Proposals in Thailand organized at the Rose Garden, Nakorn Pathom on 5-6 March 1999. A number of participants justified the high subsidy levels as necessary investments to accomplish the recent expansion of participation in higher education. This is reflected in the high levels of capital expenditure in recent higher education budgets. 3.3.2 Cost recovery and private contributions The high levels of subsidy for higher education represent an apparently inefficient and inequitable use of resources. The arrangements for the financing of higher education should be shifted to depend on greater private contributions to the cost of the programs, and mechanisms for cost recovery wherever feasible. The high rate of private returns to higher education suggests that the government should limit subsidies to a much smaller proportion of the total cost of education. Subsidy rates in the range of one-third to two thirds of the programmatic costs of higher education would be in line with the policies in many developed and some developing countries. For the non-programmatic costs (room, board, incidentals), subsidy rates should be much lower or eliminated. This would require large increases in tuition rates and other sources of revenue to replace the reduced government subsidies. These large changes in policy have major impacts on students and families and cannot be introduced rapidly. A program of phased increases in tuition and fees would be necessary to reduce the dislocations or resistance resulting from rapid increases. In addition, maintaining access for lowincome students would require increases in financial aid through grants and loans. 105
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Table of Contents A. Executive Summ
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Table of Tables Table 1 Adjustments
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Page 137 and 138: Description of flows of financial i
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Identification of Schools for Sampl
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8. Please place an X in a box below
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enrollment as a whole growing at an
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Figure 1: Thailand’s Development
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Table 5: Crude transition rates of
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and level of education, 1993 and 19
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2.31 Questionable quality of educat
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income inequality between agricultu
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4.1.4. The percentages calculated f
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Table 11: Public and Private sector
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4.3.8. As would be expected, unempl
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5.7 The dilemma is to balance the s
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Table 14: Unemployment and Underemp
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there any activities that would be
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References Chalongphob Sussangkarn
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Appendix 6 BMA Voucher Policy A. Lo
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Appendix 7 Finance Allocation Metho
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Appendix 8 Program Structure of the
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Not all possible flows are show, si
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Appendix 11 Results of Regression A
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